U.S. industrial output edged up just 0.1 percent in May as supply chain disruptions from the earthquake in Japan disrupted auto production for a second straight month, the Federal Reserve said on Wednesday.

COMMENTS:

JERRY WEBMAN, CHIEF ECONOMIST, OPPENHEIMER FUNDS, NEW YORK

The manufacturing part of the industrial production number, even with the weak auto numbers, was pretty good for the economy. Manufacturing has sustained the economic expansion and seeing it rise, despite the weak automobile numbers, is encouraging.

ERIC GREEN, CHIEF ECONOMIST AND HEAD OF RATES STRATEGY, TD SECURITIES, NEW YORK

The headline was a bit weaker than expected, but that was driven by a pretty big decline in utility output, which was probably affected in some measure by some of the severe weather we had in April and May. Factory output was up 0.4 percent, so that's good news. In terms of weakness, capacity rates were a bit lower than expected, so while we are well off the lows here in terms of capacity rates, they have effectively stalled over the last couple of months.

It could have been more disappointing, certainly in light of what we saw in the Empire survey, which showed contraction. But instead you saw an increase of 0.4 percent in manufacturing output. I think that takes a good deal of the sting out of an Empire survey that was a lot weaker than expected, but also exceptionally volatile.

RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK:

Industrial production was a little weaker than expected. One of the things though is that it looks like a lot of this was motor vehicles and utilities. Motor vehicles is not too much of a surprise given that what happened in Japan and the supply chain disruption is ongoing but it is less of an impact than it was in April. Utilities is mostly a weather thing and that should probably fade. So, it is not that bad when you look beyond those numbers.

TERRY SHEEHAN, ECONOMIC ANALYST, STONE & MCCARTHY RESEARCH ASSOCIATES, PRINCETON, NEW JERSEY

These are a little disappointing but it looks like much of the softness was concentrated in utilities which were down more than expected. There certainly is some evidence that the slowdown in motor vehicle production had an impact here in the manufacturing portion of the data. But this will be a temporary effect.

The Fed will certainly take this into account when they meet next week but the Fed does take a longer view. Many of the factors behind this data are likely to be temporary. The deflation risk has dissipated, so this just means the Fed will be on hold for longer.

FRANK DAVIS, DIRECTOR OF SALES AND TRADING AT LEK SECURITIES IN NEW YORK

The utility portion of industrial output looks like it held back the number a bit, but this is a non-event with all the other factors out there. Overseas seems to be leading us down, with Greece especially a battering ram to get us lower, but we're hoping to see a low in oil prices, which could help us bottom in the near-term and hopefully move up from that base.

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